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O 131347Z AUG 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8396
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UNCLAS SECTION 01 OF 04 MEXICO 004293 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
SECSTATE FOR A/S SHANNON 
SECSTATE FOR WHA/MEX, WHA FOR GSPROW, 
SECSTATE FOR WHA/ESP, EB/IBF/OMA 
SECSTATE FOR EB/ESC MCMANUS AND IZZO 
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GWORD 
USDOC FOR ITS/TD/ENERGY DIVISION 
TREASURY FOR IA (ALICE FAIBISHENKO) 
DOE FOR INTERNATIONAL AFFAIRS KDEUTSCH AND ALOCKWOD 
SECSTATE PASS TO USTR (EISSENSTAT/MELLE) 
SECSTATE PASS TO FEDERAL RESERVE (CARLOS ARTETA) 
NSC FOR DAN FISK 
 
E.O. 12958: N/A 
TAGS: ECON PGOV ETRD SPP MX
SUBJECT:  FUTURE OF THE SPP AND NAFTA - MEXICAN VIEWS LEADING INTO 
THE NORTH AMERICAN LEADERS MEETING IN MONTEBELLO 
 
 
MEXICO 00004293  001.2 OF 004 
 
 
¶1. (SBU) Summary:  On August 9, Econoffs met with officials from 
Mexico's Ministry of Economy to discuss GOM positions for the North 
American Leaders Meeting in Montebello August 20-21, and the NAFTA 
Free Trade Commission meetings in Vancouver August 13-14. 
Expressing concern over the downplaying of the SPP at the Montebello 
meetings, they stressed the importance of keeping the SPP as a 
"permanent dialog" for the U.S., Mexico and Canada to work on common 
problems.  They warned that a greater emphasis on the economic side 
of SPP efforts was needed to counteract negative press that 
threatened to undermine SPP as an effective platform for the 
U.S.-Canada-Mexico partnership.  Under Secretary Leycegui explained 
how the "prosperity" efforts of the SPP could be strengthened by 
improving coordination with efforts of the NAFTA working groups to 
improve North American competitiveness.  Ortega cited the recent 
tour of the U.S.-Mexico border by the U.S. and Mexican Border 
Facilitation Working Groups as an example of the pragmatic measures 
possible under SPP auspices.  He noted that the high-level attention 
given by the U.S. Government was key to the success of the border 
tour, and it was important that Mexico respond with similar 
high-level attention. End Summary 
 
 
Future of the Security and Prosperity 
------------------------------------- 
Partnership (SPP) 
----------------- 
 
¶2. (SBU) On August 9, Econoffs met with Mexico's lead agency for the 
SPP and NAFTA, the Ministry of Economy,  to discuss their 
government's views leading into the upcoming North Americans 
Leaders' meeting, and the NAFTA Free Trade Commission (FTC) 
Ministerial.  Alberto Ortega, Chief Advisor to Economy Minister 
Sojo, Under Secretary for Trade Beatriz Leycegui and Director for 
NAFTA Juan Carlos Baker expressed frustration that the Canadian 
hosts of the Montebello summit were downplaying the importance of 
the SPP.  Ortega explained that the value of the SPP was as a 
much-needed "permanent dialog" that allowed the U.S., Mexico and 
Canada to work as partners on common issues rather than only dealing 
at a high-level with "contentious" issues.  Given the long 
partnership between the three countries, Ortega explained, it was 
important to maintain the SPP as a "space for dialog" to solve 
common problems like lagging competitiveness in North America. 
Ortega did not believe the Canadian side was thinking about the SPP 
in the same practical problem-solving way that the U.S. and Mexico 
were.  He complained that some in Mexico's own Foreign Ministry 
shared the Canadian view that the North American dialog should be 
broadened beyond the SPP.  Ortega expressed concern that the 
practical, common problem solving through the SPP could be lost if 
attention was overly diverted from the practical challenges of 
security and prosperity in North America. 
 
 
¶3. (SBU) Ortega said his government had learned from hosting the 
2006 SPP Summit in Cancun that the Leaders' agenda must be balanced 
between security and economics.  He said this balance has become 
more important since many in the Canadian and even the U.S. media 
see the SPP as a "secret plot."  These stories raise a negative 
profile of the SPP to a level that makes practical cooperation 
difficult.  OrtQa called on all three sides to counteract these 
negative stories by working to emphasize the partnership aspects of 
the SPP through a strong "prosperity" agenda.  Baker predicted that 
prosperity topics would occupy a significant portion of the Leader's 
agenda in Montebello, saying it was important for SPP cooperation to 
show concrete deliverables.   Ortega reported that President 
Calderon's office (Presidencia) was drafting a report outlining the 
accomplishments of the SPP, as a list of deliverables.  He said this 
list would likely take the form of a discussion paper.  All three 
 
MEXICO 00004293  002.2 OF 004 
 
 
officials agreed that the most important part of the discussion 
between the Leaders' would be about the future priorities for the 
SPP. 
 
 
Bilateral Cooperation Within the SPP 
------------------------------------ 
¶4. (SBU) After describing progress by the U.S. and Mexico Border 
Facilitation Working Groups (see below), Ortega noted that such 
bilateral cooperation was key to prosperity and security for all the 
countries in North America.  These bilateral border efforts clearly 
fell under the auspices of the SPP, he said explaining that the U.S. 
and Mexico clearly benefit from advances made between the U.S. and 
Canada along the northern border, as Canada benefits from progress 
along the U.S.-Mexico border.  Ortega believed there was a guarantee 
implicit within the framework of the SPP to include bilateral 
projects such as the borders. 
 
 
SPP - NAFTA Interchange 
----------------------- 
 
¶5. (SBU) A key way to promote the prosperity side of the SPP, 
according to Under Secretary Leycegui, was to treat NAFTA and the 
SPP as mutually reinforcing and parallel structures.  Leycegui noted 
that the NAFTA Free Trade Commission (FTC) trilateral working group 
is preparing a "future vision of North America."  Ortega added that 
the three countries were now working in two complementary 
frameworks, NAFTA and the SPP.  He saw a natural link between the 
two processes, and said the Ministry of Economy would seek to 
include that concept in any SPP Leaders' statement. 
 
¶6. (SBU) Leycegui noted that the August 13-14 NAFTA-FTC meetings 
will include a discussion between the Ministers on the future of 
NAFTA and North American competitiveness.  With the final tariff 
cuts about to be implemented, she explained, the U.S., Canada and 
Mexico are looking for ways to deepen economic integration to 
enhance North American competitiveness.  This effort could be 
significantly helped by improved coordination between the NAFTA 
Working Group and SPP efforts.  Such coordination would benefit the 
SPP by allowing it to take advantage of the 15 years of experience 
the NAFTA Working Groups have in working on issues affecting 
competitiveness, and make the SPP more effective in advancing its 
prosperity agenda. 
 
¶7. (SBU) As an example, Baker added that the Working Group on Rules 
of Origin under the NAFTA-FTC has been particularly effective 
because, while they are largely a technical group, they see the 
larger political picture through the SPP, which can help to move 
issues.  Leycegui said that progress in some NAFTA Working Groups 
stops when the experts reach an impasse.  NAFTA Working Groups under 
the SPP umbrella have an avenue to resolve disputes through SPP 
Ministerial and Leaders' meetings.  After noting the ongoing effort 
to determine which NAFTA Working Groups can continue with useful 
mandates, Leycegui said that linking those NAFTA Working Group 
efforts to an SPP umbrella could provide an avenue to ensure that 
progress is not stopped merely because of an impasse at the 
technical (or even ministerial) level.  Ortega concluded that the 
SPP process should move in parallel with NAFTA-FTC work to allow 
this mutual reinforcement. The FTC was clearly an implementing 
group, and the SPP should look to see which working groups under 
NAFTA need to be revived. 
 
¶8. (SBU) All three officials noted that only Mexico had the same 
actors working in both the NAFTA and SPP fora.  Unlike Canada and 
the U.S., Mexico had the same agency, the Ministry of Economy, 
responsible for both the SPP and NAFTA.  Ortega said he understood 
 
MEXICO 00004293  003.2 OF 004 
 
 
why the United States had the Department of Commerce and Department 
of Homeland Security responsible for the SPP, but all three 
officials argued that the U.S.-Mexico-Canada relationship would 
benefit if USTR joined the SPP process so that the SPP's prosperity 
pillar and NAFTA efforts were better coordinated. 
 
¶9. (SBU) On other FTC issues, Leycegui said she was optimistic about 
the  effort to analyze FTA's that the three countries had signed 
with other nations following NAFTA, and hoped something positive 
would come out of the effort given the urgent need to improve North 
American competitivness in the face of Chinese and Indian 
competition.  Leycegui stressed the importance of the FTC effort to 
develop terms of reference to hire a consultant to look at ways to 
improve NAFTA.  She noted the importance of the FTC's efforts to 
look beyond deepening NAFTA to broadening it by considering more 
"cumulation of origin" mechanisms not only for textiles, but for a 
wide range of products and with additional partners beyond Central 
America, such as Peru, Colombia, and even Korea. 
 
 
Border Tour a Practical Success 
------------------------------- 
 
¶10. (SBU) Ortega said a key deliverable to report to the Leaders' in 
Montebello was the success of the July 30-August 2 border tour by 
the U.S. and Mexican Border Facilitation Working Groups, which 
advanced the  Bush-Calderon initiative to improve the flow of 
legitimate commerce across the U.S.-Mexico border.  Ortega said it 
was key that the U.S. side had "the right high-level people 
involved."   He singled out the contributions made by General 
Services Administrator Lurita Doan and DHS Assistant Secretary Al 
Martinez-Fonts as showing their strong interest in seeking practical 
ways to improve the flow of legitimate trade.  He stressed that it 
was important for Mexico to show the same high level involvement. 
When Econoff asked about the absence from the border tour of Mexican 
officials responsible for infrastructure at the Ministry of 
Transport and Communications (SCT), Ortega replied that SCT's 
infrastructure officials were very much involved in the border 
facilitation effort. 
 
¶11. (SBU) Ortega said the border tour had been very useful for the 
U.S. and Mexican Border Groups to see and discuss specific, 
practical measures that could be taken.  He gave the example of U.S. 
bound trucks being scanned with a gamma ray device on the Mexican 
side of the border, then scanned again with a similar device on the 
U.S. side of the border.  He said there was a suggestion that if the 
Mexican screening could send data to be read instantaneously on the 
U.S. side, two X-ray screenings might not be needed.  Another 
example was the two-hour line of empty trucks at San Diego that were 
waiting to cross into Mexico.  Ortega claimed these empty trucks 
waited up to six hours at times.  He attributed the length of the 
wait to the requirements of a U.S. Customs inspector to check each 
empty truck.  Saying the large volume of empty trucks was tied to 
the operating requirements of maquiladoras on the U.S. and Mexican 
sides of the border, Ortega hoped that business and customs 
officials on both sides of the border could find practical ways to 
resolve this and other challenges. 
 
¶12. (SBU) Comment: Mexican trade officials are clearly energized to 
address what the view with alarm as a serious competitiveness gap, 
and they see the SPP, NAFTA, and greater economic integration in the 
Americas as tools to help make up for lost ground.  Their enthusiasm 
for taking meaningful actions in these areas is most welcome, even 
if not all of their ideas are feasible in the short-term. 
Nonetheless, we should do what we can to encourage their 
constructive inclinations.  Concrete deliverables under the SPP and 
NAFTA structures advance specific U.S. interests, and the proposal 
 
MEXICO 00004293  004.2 OF 004 
 
 
to more closely link the two is at least worth examining.  More 
broadly, it is in our strategic interest to strengthen a key partner 
who we want to see play a more prominent leadership role in 
promoting free trade in Latin America.  End comment. 
 
 
BASSETT